to think all buy to let people are just in it to get someone else to work to pay off their mortgage?

[madhurjazz]

I wish people would say it as it is. Buy to let in my mind is just about getting someone else that can't afford a deposit / without a stable job to do all the hard work to pay off the mortgage of someone else. It does feel like a massive step backwards in equality.

Very few actually want to rent, the vast majority are stuck doing so as speculation keeps pushing ownership out of reach.

Hello ChristinaRosetti

Interesting you should make this comment, I can't say I'd noticed that LLs are not responding to people saving for deposits. If that's the case then let me put it right.

Firstly I have no idea how many LLs we know but it's an enormous amount because we network loads. All round the country there are networking groups and we like attending them. Other LLs that attend these events usually are of a very similar mindset to us. I'd class them all as good LLs because it's rare for a bad LL to bother with anything like these sort of meetings.

It's very clear to us/me that we all value our good tenants and I can honestly say that it is extremely rare for a good LL to increase rents on a tenant in situ, or at least it was until Osborne put his stealth taxes into place. We take the view that the deal you agree with a new tenant is one that should remain in place for as long as they stay in the property. So the longer they stay then the better value their rents are likely to be. We have tenants that have been with us for many, many years and had never seen any sort of increase until this year.

Now we're having to respond to Osborne's tax increases and we've started putting rents up, some by quite a lot because we simply cannot absorb such a major increase in taxation.

In addition to this please understand that other costs are increasing so on change of tenants we, like others, have to increase rents. There is an ever-increasing amount of legislation, licensing fees, maintenance costs and so forth.

I have complete sympathy for people wanting to buy but being unable to afford it. I had to save for a very long time before I bought my first place. My other half was in a similar position and even lived off baked potatoes night after night because it's all the budget would stretch to. Don't think LLs don't care because the majority of us do.

Don't think LLs don't care because the majority of us do.
so interest rates cut - have you reduced the rent for your tenants
a small increase in the tax you should have been paying on this rental income - and up goes the rent
Shame on all of you BTLers and the guff about 'caring' for your tenants.

Instead, mortgage interest tax relief will gradually be cut back to 20% between 2017 and 2020.

So, our landlord with rental income of £10,000 and £9,000 of mortgage interest to pay will in future have to pay tax on the full amount, less a 20% credit on the mortgage interest.

also this is to be phased in over 4 years and you are putting up your tenant's rents NOW.

The interest rate cut isn't going to make a huge difference to monthly mortgage payments.

We haven't seen interest rates change for a long time, but it certainly isn't normal to change rent according to interest rates.

a small increase in the tax you should have been paying on this rental income

mollie are you accusing LL on this thread of tax fraud - because that could be considered a personal attack.....

a small increase in the tax you should have been paying on this rental income - and up goes the rent

The tax change was/is just window dressing to make the chancellor look as though he is doing something about evil landlords.

All businesses (except apparently useful scapegoat businesses) set interest costs against revenue. This is because businesses are taxed on profit, and you have to deduct costs like interest to arrive at profit.

Meanwhile there is a distinct absence of any policy to actually provide more housing.

What I think a lot of people fail to realise is that renting itself can be so expensive that it makes saving a deposit very difficult.

Not just the month-to-month cost, which is typically higher than mortgage payments for the property, but the add-ons - fees charged by LLs/letting agents for credit checks and tenancy renewals and applications, and all the costs of insecurity when your landlord can sell up or move you out at any moment with just a couple of months' notice, and you've got to find a new security deposit/moving costs/overlapping rent costs for a week or two while you move when the dates don't line up. That can wipe out months of savings in one go.

so interest rates cut - have you reduced the rent for your tenants

If interest rates go down, do you expect to earn a lower salary?

mollie123

As I have already said, the majority of LLs never increase rents on a tenant in situ so they're already getting a rent which is below market rate, sometimes very significantly below. We have tenants paying 60% of market rate, so your question about reducing rents with a reduction in interest rates is not very sensible is it?

Yes, the tax changes are to be phased in over several years, as will the rent increases. I suspect we'll be looking at rents rising by at least 30 to 40% by 2020 just to cover the tax change. All that extra rent will be going straight to HMRC, not benefiting the landlord in any way.

Please try to understand just how big a change this tax is. It is not just a 'bit extra', for many it is simply enormous. I have a friend that has a full time job earning high twenty thousands. He has a rental portfolio that he makes almost nothing on, partly because he chooses to keep his rents low. However his mortgages amount to almost £100k and the tax changes will now mean he gets taxed on that £100k but further than that, HMRC will see his income as being over £125k and he will lose his personal allowance as well as pay higher tax rate. In fact his tax burden will be more than he earns from the properties and his job combined! He is therefore evicting his lower paid tenants and putting rents up substantially. This is Osborne's doing.

He is therefore evicting his lower paid tenants and putting rents up substantially.

Which presumably he can do because housing is still a good investment and there is still a shortage of housing near jobs.

Can't remember exact details, but wasn't it George who allowed people to include personal property investments in pension portfolios?

I had a small deposit saved untill the council stopped paying my housing benefit as i had in excess of 16, 000. I therefore had to spend my savings in irder to pay my rent.... whoops... there goes my deposit. Plus in my sector ( education) most work us turning into zero hour contracts... go figure.

What I think a lot of people fail to realise is that renting itself can be so expensive that it makes saving a deposit very difficult.

Again though, that depends on what you are prepared to sacrifice.

You can choose to rent the best property you can afford, in an area of your choosing, or you can rent a smaller/less desirable home, in a different area, and have disposable income left to save.

In my local area there are homes to rent from a few £hundred a month to thousands. If the households that rent in the "middle" of the range want to save for a deposit, why don't they rent a cheaper home? Of course, those who can only just afford to rent at the very bottom of the range won't be able to save in the same way, but it's clear they aren't the only people renting.

I had a small deposit saved untill the council stopped paying my housing benefit as i had in excess of 16, 000. I therefore had to spend my savings in irder to pay my rent

That's a whole other issue - should people who can afford to save receive housing benefit?

You can choose to rent the best property you can afford, in an area of your choosing, or you can rent a smaller/less desirable home, in a different area, and have disposable income

Haha.

For a few years there I was living in the smallest flat I could find that was walking distance (~3 miles) to work - because I couldn't afford a car or regular bus fares - and living off Tesco Value everything. There wasn't exactly much left to 'sacrifice'.

I think Osbornes policies will bankrupt manymortgaged landlords ( which might have been the intention)
It cant be correct to have to pay tax on the biggest cost ie mortgage if this is allowed then it could expand into other sole trader businesses.
Interest on loans will suddenly become their profit and they will have to pay tax. This will set a very dangerous precedent
I read somewhere that it does not apply to Ltd Companies how the hell is that fair. Bash the little people over the head but look after your corporate pals

Yes merrymouse though not sure quite what your point is. I was attempting to show the effects of the tax change, which are enormous.

This isn't meant to be inflammatory but the problem with some people is that they've become so bitter towards LLs that they don't want to understand why the tax changes have been introduced, what they actually mean in terms of taxing landlords, why landlords MUST react to survive and what that means for them. They just want to blame landlords when the real villain is Osborne.

Osborne has cleverly introduced a stealth tax knowing that LLs will take the blame. The press are waking up to the truth now and as well at the Telegraph, the Express has realised just what devastating change the tax is. Even the Guardian is realising that it is not what was sold to the Public by Osborne and Gauke.

For a few years there I was living in the smallest flat I could find that was walking distance (~3 miles) to work

So walk further. Grow your own food (there are schemes where people without gardens can grow in unused gardens). Try and supplement your income. There are lots of things that most people CAN do, if they really want to.

So walk further. Grow your own food (there are schemes where people without gardens can grow in unused gardens).

Yes, clearly I should have been doing a 5-mile walk home at 10pm, stopping off along the way at the paddock where I was grazing my free cow

Thousands of people make sacrifices or get better or second jobs to afford a deposit, but if you dare to suggest it you will get a hundred excuses why it's not possible.
Most of our tenants paid rent and saved up for a deposit at the same time so it can be done.

Plus to buy a house a deposit is only one cost- don't forget stamp duty, solicitors fees, insurance, moving fees, white goods, tradesmen etc. No doubt they will be accused of exploiting people next.

at grow your own food - land costs a fortune - didn't you know?

I don't think it's possible for those who believe it is fine for someone to own their own flat and let out another to convince those who are anti-landlord to change their views. We debate it all the time on here and both "sides" set things out but I do not think anyone is ever convinced of the position of the other side.

The bottom line is where it thinks appropriate the state intervenes so eg we now have 40% tax payer landlords with mortgages subject to paying tax on profit they do not make so of course they put up rents or sell the flats. We also have the extra 3% often £12k plus stamp duties on landlords buying a second or 3rd etc property. So there is the state intervening. We have I think registration of landlords in Wales I think (not England so far). We have a lot of expensive things Landlords have to do that they did not in the past have to do like energy certificates, gas checks, deposit holding schemes, checking your tenant is not an illegal immigrant.

Things just are as they are. Most landlords are good and don't make much proift. Some aren't. Some are very good and make a lot of profit and as a capitalist I salute them for that.

We were thinking of buying or building for that very reason - is is a secret???

Some are very good and make a lot of profit and as a capitalist I salute them for that.

Hear hear.

Some of you are getting the terminology wrong here. You don't pay tax on your mortgage interest . The new rules will mean that you are no longer able to offset your interest payments as a cost. This means your profit will look higher and you will then have to pay more tax on your profit. Not on your interest!

Haha.

For a few years there I was living in the smallest flat I could find that was walking distance (~3 miles) to work - because I couldn't afford a car or regular bus fares - and living off Tesco Value everything. There wasn't exactly much left to 'sacrifice'.

This is where the question of reward comes in, though.

Suppose you had a co-worker who had lived in the same flat as you, but had taken on a really awkward sharing arrangement and halved her rent? Suppose she had spent only half the rent that you did over the span of her tenancy, and in doing so, she had cobbled together a deposit?

Would I be willing to do this? Not sure. Would I applaud the person who was shrewd enough to do this? Yes.